استفاده از گزینه های واقعی برای کمک به ایجاد مورد کسب و کار برای سرمایه گذاری در CRM

The long-term benefits of implementing a Customer Relationship Management programme are widely accepted as being: learning from customers, building customer retention, and reduced market uncertainty. Yet high rates of failure in CRM can originate right at the stage where the investment decisions are made. Traditional discounted cashflow analysis alone does not value or focus managerial attention upon the strategic long-term benefits of CRM. Through a simulated case study analysis, this paper illustrates how the addition of Real Options to discounted cashflow can improve CRM investment decision making, encourage managers to verify critical assumptions and reduce both investment and business risk.

Customer Relationship Management appears to be a win:win strategy whereby companies secure and learn from their customers who in turn receive customised solutions, reduced costs and superior service. However the difficulty in quantifying the effect of CRM from a financial perspective often results in it floundering at the stage where the investment decisions are made. Perversely, the financial framework most often used in preparing business cases for CRM may inhibit such programmes from achieving their strategic and business objectives. Arguably, the traditional cashflow analyses based upon Discounted Cash Flow (DCF) and Net Present Value (NPV) calculations are too limited a basis on which to make CRM investment decisions. This is because they undervalue returns, and focus management attention on short-term cashflow when, perhaps, the main benefits of customer relationship investments lie in building a strategic customer relationship asset. In other words, the long-term benefits of closer, deeper relationships with selected customers are difficult to quantify in cash terms as they can lead to reductions in the volatility of sales, market uncertainty and business risk. Given that CRM investments are usually strategically significant, with a value in the range of $60m to $200m for a highly complex installation, the risk of business failure needs to be fully quantified.1 In the 1990s, the climate for CRM investment was more favourable and companies invested without fully considering any risks. Research suggests that 55 per cent of all CRM projects have not produced results, and some 20 per cent of users report actual damage to long-standing customer relationships.2 Today, business leaders are demanding a more rigorous approach to developing and presenting the business case for CRM investment. As a consequence, the senior managers involved in delivering the business case, usually a project team drawn from Marketing, Sales, IT and Customer Service, need to address fully the questions: ‘What steps can we take to reduce the uncertainty in the business case for CRM?’ and ‘How do we reduce the risk of business failure if we adopt a more customer-centric approach through CRM?’ In this paper, we first identify the potential benefits of CRM investments both to customers and the company. Then we explore the limitations of DCF and NPV in assessing how the CRM business case is presented. To counter the problems of risk and uncertainty left largely unanswered by a cashflow analysis, we introduce the idea of Real Options as a risk-reduction step to build the business case for CRM investment. This we do through a simulated case study of a telecoms equipment manufacturer considering a CRM investment. Initially, we develop a range of business case scenarios for the company, together with a cashflow calculation for each. These scenarios show wide variability, depending upon the business assumptions made, and we conclude that they significantly undervalue the likely effects of the company's CRM investment and look very high risk indeed. To help mitigate the uncertainty of such a large-scale investment, we introduce the idea of using Real Options, in conjunction with traditional cashflow analysis, to quantify the effects of trialling CRM as an alternative pathway for building the case for CRM investment. Although Real Options have been used to manage other IT investment risks, as far as we are aware, this is the first time Real Options have been applied in the context of a CRM investment.3 We close the paper by exploring the managerial implications of how this combination of cashflow and Real Options helps reduce uncertainty in the CRM investment and discuss our contribution to the marketing literature.

Managerial implications There are two important implications for CRM project managers concerning how they make the business case for CRM and the way in which they structure and implement subsequent CRM programmes. Many CRM projects fail, indicating that they are risky. In these circumstances, making a case using DCF/NPV will misrepresent the real value of projects that contain options. The greater the uncertainty, the greater the option value. Making a case for CRM based solely on DCF may deter senior managers from investing in CRM because the potential is understated. In conditions of high uncertainty, a lower commitment entry strategy with real options represents the best approach, avoiding high market risk while maintaining the option of greater investment later.20 The Westel example demonstrates the limitations of financial models (DCF/NPV) which senior managers typically use when building the business case for CRM. Faced with the constraints of considering only the immediately identifiable cashflows, companies may tend to underestimate the true value of the benefits derived from CRM, such as learning from key customers and building their trust. This means that business leaders may not invest in such a programme, leaving their companies vulnerable to competitors. Real Options can help demonstrate the true potential of CRM investment. The CRM business case is a major strategic document and not merely a financial forecasting exercise. It represents a fundamental change to the business and should be evaluated as a strategic, risky and contingent investment in an unknown future. The challenge for senior managers is to promote a discussion that identifies the extent to which their business must move from a traditional ‘make and sell’ model to ‘listen and respond’ in an unknown future and real options thinking can help to generate this discussion. The second implication concerns the way in which managers structure and implement CRM programmes. The Westel case illustrates the benefits of options thinking and of structuring CRM programmes to create options to defer, pilot or upscale major CRM investments. Without options thinking, companies may fail to build into the programme sufficient flexibility to learn from customers, which could compromise the huge investment that CRM requires. It can, therefore, enable a rational discussion of risk and flexibility in the search to optimise the structuring of CRM investments and the implementation of programmes. Moreover, in the time before the option must be exercised, the three years of the Westel Trial CRM in this case, senior management attention will be focused on validating the key assumptions built into the business case. This will promote a rigorous, fact-based means of quantifying CRM benefits. Implications for marketing academics This paper contributes to the emerging research agenda that seeks to relate marketing expenditure and investment to financial performance and shareholder value. Researchers have long decried the lack of sound financial analysis applied to marketing investments and recently the Marketing Science Institute in the US has raised the importance of measuring marketing effectiveness to the status of priority research.21 We would suggest, therefore, that finding appropriate tools for assessing CRM investments helps contribute to this research agenda because the development of profitable customer relationships through CRM is central to the role of marketing. Indeed, Doyle argues that successful marketing strategy, and the creation of shareholder value, is dependent upon building relationships with target customers based on satisfying their needs more effectively than competitors.22 In this paper, we illustrate that the most common methods used to evaluate CRM investment, the DCF calculation and NPV, have clear limitations and cannot be regarded as good predictors of the shareholder value created by CRM investment. Previously, Srivastava et al identify real options theory as a potential approach for assessing the value of projected cashflows from such CRM investments.23 However, they do not provide any examples of its use in practice. So, a further contribution our paper makes to the marketing literature is to provide an example of how real options can be deployed in conjunction with DCF and NPV calculations to develop a more thorough and effective method of building the business case for CRM investment.